THE GOVERNMENT of Iceland is to hold a referendum in April asking voters to endorse a deal that would see the country repay around €3.65bn in borrowings taken out during its banking crisis.

The country’s government borrowed cash in the form of bilateral loans from Britain and the Netherlands when Landsbanki collapsed, in order to return deposits to the country’s populace of savers.

Now the country will vote on whether to repay the deal, at an interest rate significantly lower than that put to the public in a first referendum almost a year ago.

That deal would have seen the full repayment take place over the next 15 years at an interest rate of 5.5 per cent – but it was voted down by over 93 per cent of voters.

A revised package sees the loan instead repaid over 35 years at an annal interest rate of 3 to 3.3 per cent.

Though president Olafur Ragnar Grimsson could have signed the deal directly into law himself, he has announced he will instead put the deal to the public, as the first one had been, following a public petition signed by around 12 per cent of the population.

Opinion polls suggest that the deal will be backed: a poll commissioned by the Frettabladid paper showed that 61 per cent of voters were in favour of the reformed package.

If the deal is rejected, it is thought unlikely that the UK and Netherlands would be willing to negotiate its terms for a third time – and would instead refer it to the European Free Trade Association for arbitration.

Voting on the deal, dubbed ‘Icesave’, will take place on April 9.